Every day, we are asked for clear definitions of human resource management topics. While definitely not a comprehensive compilation of important of terms and topics related to human resources, we hope this mini glossary provides great value to our clients and readers.
We handpicked some of the most common HR terms that are relevant to professional HR audiences as well as the layman. If you have any questions about human resources, don’t hesitate to contact the HR experts at Resourcing Edge.
Named for the section of the Revenue Act of 1978 authorizing them, these cash or deferred arrangement (CODA) plans allow employees to agree to a reduction in salary in exchange for the employer’s equal contribution to a tax-qualified trust. Employees thus can accumulate capital for retirement purposes and defer income tax on both contributed and plan income until retirement.
Employers are allowed to match some portion of employee contributions — the most common match is 50%. As with all contribution pension plans, there are nondiscrimination regulations to ensure that plans do not discriminate in favor of highly paid employees.
Absenteeism is the failure to show up for scheduled work. This is distinguished from tardiness or lateness, which indicates a failure to report for work on time, and turnover, which indicates a permanent leave from work where the ex-employee is replaced. The main reasons for being concerned with absenteeism are increased cost to the organization, clues about employees’ mental and physical health, and employees’ job satisfaction. While research is limited, some studies suggest that absenteeism is most associated with a lack of social or psychological attachment to the organization. A lot of temporary absence correlates with high turnover rates.
Since absenteeism refers to missing scheduled work, jury duty, vacation, and maternity leave are generally not considered an absence. There are a variety of ways to deal with absence, but punishment and discipline systems seem to be the most common despite evidence demonstrating their ineffectiveness. A more effective method would be to reward good attendance with incentives like money and time off. Job enrichment and flextime have both been associated with reduced absence, as have self-management programs that teach employees to regulate their own attendance behavior.
Affirmative action is the practice of giving explicit consideration to race, gender, national origin, or some other protected characteristic in making an employment decision. It is designed to counter the lingering effects of prior discrimination.
Affirmative action is required by federal law for recipients of federal contracts, may be ordered by a court as part of the settlement or remedy in a lawsuit charging an employer with discrimination, or may be voluntary.
Arbitration is the process of dispute resolution that is voluntarily agreed upon by two parties to accept an impartial arbitrator’s decision on the parties’ dispute. Arbitration is less formal than a court trial, but the process is similar. Following the hearing, the arbitrator issues an award. Arbitration can be either binding or non-binding. If it is binding, the courts can enforce the decision. If it is non-binding, the award is only final if both parties agree to it.
Employee benefits are part of the total compensation package that includes all tangible return for an employee’s labor except for direct payment. Some benefits are mandatory, such as social security benefits, unemployment compensation, and workers’ compensation, while other benefits are discretionary, such as paid time off, health care, retirement, child care, employee discounts, club memberships, and financial assistance plans.
Benefits administration consists of designing, developing, and integrating the various benefits as a unified system. This includes enrolling employees, communicating with employees, dealing with benefits vendors, and handling changes. Many companies choose to outsource benefits administration, such as through a professional employer organization (PEO).
Civil Rights Act of 1964
Title VII of the Civil Rights Act of 1964 (amended by the Equal Employment Opportunities Act of 1972 and the Civil Rights Act of 1991) prohibits employer or union discrimination on the basis of race, color, religion, sex, or national origin. It generally applies to private employers, state and local governments, and educational institutions with 15 or more employees.
Unlawful discrimination falls under two legal theories: disparate treatment and disparate impact. Disparate treatment occurs when an employer treats some individuals less favorably on account of their race, color, religion, sex, or national origin; however, proof of the discriminatory motive must be provided. Disparate impact exists where employment practices, such as hiring and firing, have an adverse disparate impact on a protected group, regardless of if the employer intended to discriminate.
The time limit to file charges with the Equal Employment Opportunity Commission (EEOC) is 180 days after the discriminatory act. After the EEOC has reached a conclusion, the individual has 90 days after receipt to file a civil lawsuit in a federal district court.
There are some Title VII exceptions, such as instances where religion, sex, or national origin is a bona fide occupational qualification (BFOQ) that is reasonably necessary.
Compensation is the total cash and non-cash returns (financial rewards, services, and benefits) that are provided by the organization to an employee in exchange for their labor.
Discrimination in an employment context refers to behavior that has the purpose or effect of harming some individuals by virtue of their membership in a protected class. This encompasses a wide range of attitudes, conducts, and processes that produce differential results without appropriate justification.
The major anti-discrimination legislation exists at the federal level and applies to both public and private employers, such as the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act of 1990.
Employee Assistance Programs
An employee assistance program (EAP) is an employer-sponsored intervention designed to identify and assist employees with personal problems (substance abuse, psychiatric disorders, workplace violence, marital and family problems, financial difficulties, etc.) that interfere with their work performance.
EAPs help the organization by assessing the nature of the problem, selecting the right resources and assistance, following up with the employee, and training and consulting with supervisors and managers about related policies and procedures.
Larger employers (more than 1000 employees) are more likely to provide an internal EAP while smaller employers are more likely to contract with an external provider of EAP services.
Employment is deemed to be at will on the part of both the employer and the employee. An employer can fire an employee at any time for any reason, while at the same time the employee can quit his or her job at any time for any reason. Those seeking a different type of arrangement are free to write contracts under different terms.
Equal Employment Opportunity Commission
The Equal Employment Opportunity Commission (EEOC) is the federal agency in charge of administering Title VII of the Civil Rights Acts, the Equal Pay Act, the Pregnancy Discrimination Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act. The agency process the charges of the discrimination related to these laws. Charges are resolved via conciliation and/or legal action. The agency processes over 90,000 discrimination charges per year.
Equal Pay Act of 1963
The Equal Pay Act, an amendment to the Fair Labor Standards Act of 1938, requires employers to give women equal pay to men for equal (not similar) skill, effort, responsibility, and working conditions. Pay may differ when based on seniority, merit, performance, or any other factor not based on sex. Pay can’t be reduced to bring the organization into compliance.
There have been many executive orders that have been issued over the last 60 years to help eliminate employment discrimination by the federal government and private employers who have contracts with the federal government.
Some of the most important executive orders related to employment law are:
Exit interviewing and surveying (EIS) are used to get information from employees who are leaving the organization. EIS is used for identifying reasons for company turnover, training and development needs, and strategic planning goals. Generally, the exit interview focuses on employee feelings about compensation and benefits, working conditions, opportunities, workload, and work relationships, although it may focus on a specific problem area, such as cybersecurity.
Family and Medical Leave Act of 1993
The Family and Medical Leave Act of 1993 (FMLA) is the first federal law mandating employers to provide leaves of absence for childbirth or the care of seriously ill children or other family members. Qualifying circumstances that trigger the mandated leave include birth or adoption of a child, required care for a child, spouse, or parent having a serious health condition, or the employee’s own serious health condition. A serious health condition is defined as any physical or mental condition that requires inpatient care or continuing treatment by a health care provider.
FMLA requires that employers allow eligible workers up to 12 weeks of unpaid leave in any 12-month period for qualifying circumstances; however, only workers who have been employed by the employer for at least 12 months and have at least 1250 hours of service during that period are eligible for leave under the Act. Employers having fewer than 50 employees are exempt from the Act’s coverage.
Flexible Working Hours
Flexible working hours represent an arrangement between the employee and employer that provides the employer with some degree of discretion in terms of the hours that they will work. There are many different arrangements that can be worked out, however, they tend to fall under three basic variations: a) staggered start systems; (b) flextime systems and flex hours; and (c) variable hour systems.
Most workers prefer flexible hours rather than more conventional working hour arrangements. Flexible hours are commonly associated with increased work satisfaction and productivity, as well as improved attitudes toward its effect on one’s family and social life. Flexible work hour arrangements can aid in recruiting and retaining employees, reduce tardiness and absenteeism, as well as reducing short-term leaves and sick leave usage.
Flexplace (telecommuting) involves working from home or another location away from the office. It involves conducting work away from the office, but electronically linked to it. As technology advances, telecommuting becomes more effective, affordable, and commonplace.
Telecommuting aids in attracting and retaining skilled employees, reducing real estate costs, and alleviating traffic congestion and carbon emissions. It’s also been said to increase productivity and heighten moral and satisfaction.
Human Resource Audits
A human resources (HR) audit is a series of systematic, formal procedures designed to evaluate the efficiency and effectiveness of the organization’s HR management system. The audit compares the current system to relevant internal and external benchmarks, evaluates the appropriateness of this system for implementing the firm’s strategic and operational objectives, and provides a framework for improving the way in which the firm manages people.
Specific areas of analysis include job and organizational design, recruitment and selection, performance management, compensation and benefits, employee development and training, HR planning, labor relations, diversity management, and compliance with legal and governmental guidelines.
Human Resource Information Systems
A human resource information system (HRIS) encompasses the technology and procedure for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources, personnel activities, and organization unit characteristics. HRIS enhances human resource management in several ways, including reducing the time and costs of gathering, summarizing, and distributing information, and providing data to improve decisions about programs or personal choices.
Today, HRIS can be accessed at any time from computers and phones, and employees are able to log in to get information about company programs and policies, change their personal data entries, and even obtain assistance for decisions, such as choosing benefit plans.
A job description is a written summary of the nature and responsibilities of a job. Most job descriptions include these elements:
- Job identification with job title
- Job overview that states mission of the job
- Primary tasks involved in the job
- List of equipment, technology, and tools used
- Raw materials, goods, data, or other materials used
- Guidelines and controls, such as supervision
- Required knowledge, skills, abilities, and other characteristics
- Description of the work context, including working conditions
- Statement of the required qualifications, such as licenses and education
Job descriptions are useful for job postings, job performance, salary decisions, staffing functions, and clarification of performance expectations.
Job-skills training initiatives, also known as upskilling (learning new skills and competencies within the same job profile) and reskilling (learning new skills and competencies to transition to a different career), are designed to identify and target improvement in the skills individuals need to be successful in the workplace. Skills training is becoming increasingly important as employers face rapid technological change, global competition, and other new business realities.
Merit pay refers to pay increases based on performance appraisal. The better the appraisal, the larger the pay increase granted to the employee. Traditional merit pay is a permanent increase to an employee salary while a lump sum merit pay plan are one-time bonuses not made as a permanent addition to employees’ salaries. Merit pay is one form of “pay for performance.”
Occupational Safety and Health Act of 1970
The Occupational Safety and Health Act of 1970 (OSHA) is meant to provide safe or healthful employment by setting and enforcing standards and providing training, outreach, education, and assistance. OSHA covers nearly every private sector place of employment.
Employers are required to:
- Provide each employee a place of employment that is free from recognized hazards, which either are causing or are likely to cause serious physical harm or death.
- Allow the government to inspect the workplace at reasonable times, investigate and to question privately, employers, owners, operators, agents or employees, and make available records regarding activities related to the Act.
- Refrain from retaliating against employees who exercise their rights under the law, including requesting inspections or raising a health or safety concern with you or with OSHA.
- Inform and train all employees who may be exposed to hazardous chemicals, either during foreseeable emergencies or during their work routines, and to inform them when a new hazard is introduced into the workplace.
- Notify OSHA within 8 hours of a workplace fatality and within 24 hours of any work-related inpatient hospitalization, amputation, or loss of an eye.
- Comply with all applicable OSHA standards.
- Prominently display the OSHA poster in the workplace.
Besides employer obligations, section 5(b) imposes a broad set of obligations on employees. Nevertheless, the Act does not contain penalties for violation of employee obligations. For all practical purposes, the OSHA law regulates employer compliance but not employee compliance.
Paid Time Off
Paid time off (PTO) is a policy that allows employees to receive a set of paid time off allowances, including vacations, holidays, sick days, jury duty, short-term military service, funeral leave, and severance pay. Total time off (TTO) combines many of the above categories into a single annual allowance.
Performance appraisal is the process of identifying, observing, measuring, and developing human performance in organizations. The identification process involves determining what areas to focus on, including identifying performance dimensions and developing rating scales. Performance appraisals provide the basis for a variety of personnel actions, such as training, salary increases, layoffs, and terminations.
Professional Employer Organization (PEO)
A professional employer organization (PEO) provides comprehensive HR services (payroll, benefits, HR administration, compliance assistance, etc.) to small and medium sized businesses through the use of a co-employment relationship. According to NAPEO research, “Small businesses that work with a PEO grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower, and are 50 percent less likely to go out of business.”
Profit sharing is a type of variable compensation policy that provides employees with income that is based on the profitability of the entire organization or selected subunits. Profit sharing can instill a sense of partnership with other employees and managers across organizational units since each employee is entitled to receive a share in the success of the organization, as measured by profits.
The three basic types of profit sharing plans are (a) cash, (b) deferred, and (c) combination cash–deferred plans.
Recruiting consists of activities (writing job ads, training recruiters, etc.) that provide a pool of applicants for the purpose of filling job openings. Successful recruitment requires careful planning, strategic recruitment actions, and the evaluation of past recruitment efforts.
Recruiting sources can be divided into two types: internal and external recruiting sources. Internal recruiting involves recruiting current employees while external recruiting sources refer to methods directed at individuals who are not current employees. Some common external sources are: brochures, videos, radio, advertisements, television and electronic networks, job fairs, employee referrals, internships, and educational site visits.
Retraining refers to teaching individuals the knowledge, skills, abilities, and other characteristics (KSAOs) that will be necessary for them to obtain jobs in new occupations or organizations. In contrast to training, retraining refers to teaching individuals knowledge, skills, and abilities related to jobs outside their current occupations or outside their current organizations.
Retraining is frequently used to retool individuals whose career paths have become obsolete due to changes in technology, to prepare individuals to assume jobs in different industries or organizations after they have been laid off, or to prepare individuals to take new positions after a structural reorganization of the firm has led to the elimination of their present jobs.
Safety in the Workplace
Previously called occupational safety, workplace safety refers to the ability to manage (prevent, avoid, and control) job-related losses due to sudden changes in process, material, resources, or energy. Safety could also be defined as those things we presently should see that could cause us immediate harm.
Sexual harassment is a form of sex discrimination and is defined by the Equal Employment Opportunity Commission as “unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.”
Employers can be held legally liable for “quid pro quo” sexual harassment as well as for the creation of a hostile or offensive environment. In Harris v. Forklift Systems, the court ruled that the plaintiff does not need to prove any physical, psychological, or financial harm as a consequence of the harassment. It tis the conduct itself that is unlawful if a reasonable person would find that the conduct had created a hostile or offensive work environment.
Society for Human Resource Management
The Society for Human Resource Management (SHRM) is the lading voice of the human resource profession, representing the interests of more than 64,000 professional and student members from around the world. SHRM provides its members with education and information services, conferences and seminars, government and media representation, and publications that equip HR professionals for theirs roles as leaders and decision makers within the organization.
Training programs are learning events that are planned in a systemic fashion and related to events in the work environment. The training process is the systematic acquisition of skills, rules, concepts, or attitudes that result in improved performance in the work environment. Training efficacy stems from a strategically designed learning atmosphere based up a careful evaluation of job requirements and the capabilities of trainees.
Unemployment compensation is a US federal-state partnership created by the Social Security Act to protect workers who have lost their job due to no fault of their own. Each state administers its own unemployment programs that typically specify partial income replacement for up to 26 weeks. Benefits are funded by an employer tax (employees contribute in some states) that is essentially tied to involuntary terminations and layoffs.
Wellness is defined as the balance of physical, emotional, social, spiritual, and intellectual health. Wellness programs range from simple to complex and include activities such as regular physical activity, health screenings, onsite fitness center, weight loss programs, and fitness memberships.
Workers’ Compensation Benefits
Workers’ compensation programs provide benefits to workers who experience work-related injuries or diseases. These benefits usually include payment of medical care, rehabilitation services, and a portion of lost earnings. In addition to helping injured works, workers’ compensation programs are also designed to improve occupational safety and health through financial incentives that encourage employers to invest in preventions. Workers’ compensation benefits are typically funded by employer contributions, which are either the same percentage of payroll for all employers, the same for all employers in an industry group, or geared to individual employer experience.
Sources: The Blackwell Encyclopedic Dictionary of Human Resource Management and The Society for Human Resource Management (SHRM)
Get Expert HR Support at a Lower Cost
A PEO like Resourcing Edge provides access to trained and certified HR professionals to aid with all your human resource and administrative responsibilities, including payroll, benefits, workers’ comp, and compliance.
PEO services include:
- Taking over key HR responsibilities
- Administering employee payroll and benefits
- Personnel management
- Workers’ compensation services
- Human resource information system (HRIS) access
- Monitoring and managing risk in these areas
PEO clients enjoy an average 21 percent savings on HR administration, not including the extra savings generated from access to high-quality, affordable benefits. Additionally, businesses that use a PEO are approximately 50 percent less likely to fail from one year to the next (NAPEO).
Resourcing Edge offers ongoing support and assistance for everything from benefits administration and risk management to job descriptions and PTO policies. We are your single source for HR operations, administrative relief, compliance, and HR best practices through a convenient PEO model.
If you’re looking for help navigating all the complexities of human resources, speak with the certified, accredited, and bonded HR experts at Resourcing Edge.